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My company is suing ICBC and a third party for diminished value or accelerated depreciatioin and also loss of economic opportunity in a small claims action. It is not a large amount – approx $7K. I’ve researched some case law that I will utilize in the case, if settlement is not reached. I know ICBC dances around this issue. Is there any pertinent information out there that could help in this action? I was wondering about the “law” of disclosure of $2000 of damage. What would be the purpose of this law, if only to make a purchaser aware of it and to adjust the value due to the extent of the damage? Any help would be appreciated.
Ken,
There is a legal principle called Caveat Emptor (buyer beware) that does not obligate a seller to disclose defects (or potential defects) in a product. It is up to the buyer to inspect the product to find existing or potential defects. I do not know the history of the law requiring the $2,000.00 declaration, but I expect its purpose was to deal with the problem that when significant damage is sustained to a vehicle there may well be existing or potential defects that cannot be found by way of inspection. Caveat Emptor is an unworkable legal doctrine in that circumstance, because no amount of inspection will expose the extent of damage a vehicle may have sustained.
If you have not already found it, I suggest that you bring a printout of Signorello v. Khan [2010] B.C.J. No. 2024, to the trial, which you can access using the following link: http://www.courts.gov.bc.ca/jdb-txt/SC/10/14/2010BCSC1448.htm. I have cut/pasted from the section discussing accelerated depreciation.
I also strongly recommend that you obtain an opinion from an expert as to the extent of the reduction of value. You will see a discussion of competing opinions in the Signorello case. The expert used by the Plaintiff in the Signorello case was Mr. Garry Cogbill of C/S Automotive Appraisals. I will give you another contact – Rob Fournier of The Car Whisperers. I have had no dealings with Mr. Cogbill, but I have had dealings with Rob Fournier and he strikes me as top notch – (604) 419-1877. Withtout an expert opinion, that may cost a few hundred dollars, the Court is likely to be unable to value the accelerated depreciation.
My blog posting on this subject, by the way, can be accessed by this link, or by searching “depreciation” on this blog: http://www.paulhergott.com/the-real-world-meaning-of-the-term-accelerated-depreciation/
Paul Hergott
Excerpt from the Signorello case:
ACCELERATED DEPRECIATION
11 In British Columbia, a person wishing to sell a used motor vehicle that has sustained damage in an accident costing $2,000 or more to repair must declare that to any potential buyer. Other matters that must be declared include whether the vehicle has been leased or rented, whether it has been used as an emergency vehicle, and whether it has been registered out of province.
12 Since any person considering the purchase of Mr. Signorello’s Mercedes would presumably investigate further and thereby become aware of its history and the cost of its repairs, Mr. Signorello maintained that the market value of his vehicle has been reduced, a phenomenon known as accelerated depreciation.
13 The plaintiff’s claim under this heading was supported by expert evidence from Mr. Garry Cogbill of C/S Automotive Appraisals. It was his conclusion that the loss amounted to 15% of the vehicle’s value at the time of the collision, varying between $12,500 and $18,000 depending upon whether one takes wholesale or retail.
14 The defendants’ contention that the plaintiff has suffered no loss in this regard was supported by expert evidence from Mr. Tom Cino of T.C. Consultants. Mr. Cino expressed the view that so long as a vehicle damaged in an accident has been repaired properly, as this one clearly was, then there is no loss due to accelerated depreciation regardless of the amount of the damage.
15 Having read their reports and listened to the evidence of both experts, I find that I prefer the evidence of Mr. Cogbill to that of Mr. Cino. I do so for the following reasons.
16 While it would be unfair to describe Mr. Cino as an advocate for the party who retained him, he struck me as someone who is certainly an advocate for his position that, in general, a motor vehicle that is damaged in an accident does not suffer accelerated depreciation so long as it is repaired properly. It is a position he has advocated for a long time. As he stated, he set out many years ago to prove that the use of the damage declaration by automobile dealers to reduce the trade-in value of vehicles subject to those declarations, was just a sales tool, and that so long as the vehicles had been repaired properly, they were in fact worth as much as similar vehicles that had not been damaged.
17 To this end, he prepared and published studies in 1998 and 1999 and titled “Accelerated Depreciation in British Columbia”.
18 But in my view, the statistics that support his studies are not helpful in solving the problem before us here. There is nowhere near enough data available to be able to extract the proposition for which he contends.
19 The issue is whether, in the marketplace, people prepared to pay a six-figure sum for an exotic performance motorcar such as Mr. Signorello’s are likely to pay less for one that they learn has sustained $26,000 worth of damage, then they would for one that had never been in an accident, all else being equal.
20 The thrust of Mr. Cino’s opinion seems to be that a reasonable person who is as knowledgeable about motor vehicles as he most certainly is, would not think that a car that had been properly repaired is worth less than a like vehicle that has never been damaged. That does not answer the question of what is likely to happen to this car in the marketplace, where reason does not necessarily prevail, and where few have his depth of knowledge.
21 Mr. Cino further based his opinion in part on the proposition that the majority of the repair work performed on Mr. Signorello’s Mercedes was to repair cosmetic damage rather than mechanical damage or damage to the frame. He included in his description of “cosmetic damage” damage that could be repaired by the removal and replacement of the damaged part. Mr. Cogbill, on the other hand, described most of the damage as other than cosmetic. I prefer Mr. Cogbill’s approach.
22 To my mind, to be of significance in this context, cosmetic damage must mean damage that pertains only to the vehicle’s appearance, and need not be repaired in order for the vehicle to operate properly. On that basis, I can well imagine that a potential buyer’s approach to a vehicle that had suffered $20,000 worth of cosmetic damage would be different from his approach to a vehicle that had suffered $20,000 worth of damage of a type that had to be repaired in order for the vehicle to be operable. In this case, it is clear that the majority of the damage to the SL 65 was of the latter type, even if it consisted largely of the removal and replacement of mechanical parts. I therefore found Mr. Cino’s approach in this regard to be less than convincing.
23 Finally, Mr. Cino sought to support his opinion by making a comparison to people purchasing very expensive vintage collector car, such as a 1967 Plymouth Barracuda, that has had all kinds of work put into it to restore what was a rusted hulk to like-new status. With the greatest respect, that is not an apt comparison to a discriminating purchaser considering a near-new exotic luxury sports car.
24 This is not to say that there were no problems with Mr. Cogbill’s report. Counsel for the defendant pointed out that he relied in large part on information obtained from sales managers at Mercedes-Benz dealers in British Columbia concerning their experience with vehicles such as this, and their consensus as to its saleability. In this way, she submitted, Mr. Cogbill was relying on the opinions of others who are not subject to cross-examination, in arriving at his own opinion.
25 I note, however, that Mr. Cogbill had little choice but to proceed in that manner given the rarity of the vehicle. As he testified, the starting point for any vehicle appraisal is the Canadian Black Book, a guide to the wholesale value of used vehicles in Canada relied upon by dealers across the country. This car is so rare, however, that it does not appear in the Black Book. Of course the figures in that book also could be described as opinion evidence, as could the opinions of the dealers buying wholesale vehicles at auto auctions as relied on by Mr. Cino. In the particular circumstances of this case, it is my conclusion that it was not an inappropriate way for Mr. Cogbill to approach the problem, although it would have been preferable had he included the specifics of his conversations. As it was, he did indicate the dealers whom he consulted, and the defendants could certainly have followed up with those dealers if they wished to do so.
26 Finally, in relation to the variation among wholesale prices paid by dealers for similar vehicles at the auto auction, Mr. Cino agreed that there are many factors, and that “a particular buyer pays what he thinks the vehicle is worth”. Although Mr. Cino testified as to why, in his opinion, a buyer should not think that a vehicle that has been damaged and properly repaired is worth less than an undamaged vehicle, he offered no real basis for an opinion that in this case, a buyer would not think so.
27 Relying on Gunn v. Tritow Systems Ltd. (1984), 31 C.C.L.T. 102 (B.C. Co. Ct.), counsel for the defendants further submitted that the plaintiff had not sufficiently proved a loss because the expert supplied only a range, whereas the proper measure of damages is a precise figure, being the difference in the chattel’s value immediately before and immediately after the act that damaged it. Counsel pointed out that Mr. Signorello had an opportunity to return the vehicle to the leasing company for sale at the end of his lease, which would have established any loss, but did not do so.
28 At the end of his lease, Mr. Signorello had the option to purchase the vehicle for a buyout of $90,000 plus taxes and miscellaneous charges. But it was not a situation where he could simply walk away instead. If he turned in the vehicle, he had to pay the difference between $90,000 and the amount for which the leasing company could sell the vehicle. He testified, and I accept, that he was told by the leasing company that they would be lucky to get $60,000 for the vehicle given its history, so that he would have to pay them $30,000 if he chose not to exercise his option. On that basis, he bought the vehicle. That evidence was admissible not to prove any diminution in value in the range of $30,000, but as evidence of what he was told by the leasing company, in order to explain his action. In all of the circumstances, I am unable to say that he acted unreasonably.
29 The law does not require that the plaintiff demonstrate the loss precisely by having sold the vehicle. It is enough for him to establish, as I find that he has, a reduction in its value: see Cummings v. 565204 B.C. Ltd., 2009 BCSC 1009. I accept Mr. Cogbill’s conclusion in that regard, and doing the best that I can with his figures, I assess the reduction at $16,000.
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Hi there,
I was involved in a rear end collision where I was hit from behind (100% not at fault) and my car sustained close to $5000 damage. I’m not sure if that is a substantial number but I believe it to be around half of the value of my car (2004 VW Jetta TDI). Is there any way I can sue for accelerated depreciation to get some money back? The reason I ask is that the resale value of my car has dropped significantly and it doesn’t seem right that I should not be compensated.
Thank you for your time
Thomas….call Rob Fournier (scroll up for contact information) and he will tell you whether or not, and to what extent, you have suffered a loss. You can then decide whether or not compensation for the loss is worth pursuing. Best if you are able to tack it on to your personal injury claim.